Borrowing By Any Other Name: Why Presidential 'Spending Cuts' Would Still Exceed the Debt Ceiling

28 Pages Posted: 30 Jan 2014 Last revised: 13 Mar 2014

See all articles by Neil H. Buchanan

Neil H. Buchanan

University of Florida - Levin College of Law

Michael C. Dorf

Cornell Law School

Date Written: January 28, 2014

Abstract

On three occasions since mid-2011, the United States has come perilously close to exhausting its borrowing authority under a statutory limit commonly called the "debt ceiling." In prior work, the current authors argued that, in the event that the debt ceiling is reached, the President will face a "trilemma" in which any realistic action he takes — defaulting on government obligations, raising taxes, or issuing debt in excess of the statutory ceiling — would unconstitutionally usurp legislative power. We argued that in such circumstances, violating the debt ceiling would be the "least unconstitutional option." Nonetheless, most pundits and politicians, including the President, appear to assume that if the debt ceiling is reached, default would be necessary. Here, we observe a previously unnoticed deficiency in this assumption: Default would not only usurp congressional power to set spending levels; it would not even satisfy the debt ceiling, because failure to pay money due government obligees is a kind of borrowing, both for statutory and constitutional purposes. A "loan" taken from the lender involuntarily is hardly better than consensual borrowing. The government could avoid this result only by expressly repudiating its obligations, but to do that would violate even the very narrow construction of Section 4 of the Fourteenth Amendment advanced by those who treat default as the necessary consequence of congressional failure to raise the debt ceiling.

Keywords: default, trilemma, debt ceiling, borrow, obligation

Suggested Citation

Buchanan, Neil H. and Dorf, Michael C., Borrowing By Any Other Name: Why Presidential 'Spending Cuts' Would Still Exceed the Debt Ceiling (January 28, 2014). Cornell Legal Studies Research Paper No. 14-04. Available at SSRN: https://ssrn.com/abstract=2386758 or http://dx.doi.org/10.2139/ssrn.2386758

Neil H. Buchanan

University of Florida - Levin College of Law ( email )

PO Box 357069
Gainesville, FL 32635
United States

Michael C. Dorf (Contact Author)

Cornell Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

HOME PAGE: http://www.lawschool.cornell.edu/faculty/bio.cfm?id=333

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